Abbey lifts redundancy premiums

ABBEY National is raising the premiums on Paymentcare, its redundancy insurance policy, by nearly 16 per cent from the beginning of March, writes Maria Scott.

The cover will cost pounds 6.95 for every pounds 100 of benefit. Someone wanting to insure pounds 500 of monthly mortgage repayments will pay pounds 34.75. At present they would pay pounds 30.

Abbey's policy is only available now to new borrowers.

Paymentcare premiums increased 20 per cent this time last year and at the same time the policy's terms were tightened. Unemployed policyholders can only claim benefit for a year instead of for two years, which was allowed under the old terms.

Claims on all mortgage protection policies have been heavy during the recession and premiums on most of these kinds of policies have risen. Some insurers have withdrawn completely from the market.

Even after the increase in the cost of Paymentcare, it is not the dearest mortgage protection policy on the market. For example, National & Provincial Building Society's policy, underwritten by Guardian Royal Exchange, costs pounds 7.20 per pounds 100 of cover.

Abbey National is raising charges on many services associated with mortgages. These increases include a rise in the fee for a further advance, from pounds 75 to pounds 85.

There are also some new charges including one of pounds 30 for people wanting detailed lists of past monthly repayments.